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Pic biz does the splits

More spent to tout titles …but at what cost?

Hollywood spent more money marketing movies that were seen by fewer people.

In advance of ShoWest, which begins next week in Las Vegas, the Motion Picture Assn. of America issued its market statistics for 2005’s soft year at the box office.

Despite the average marketing costs on a studio film rising last year by 5.2% to $36.2 million per picture, U.S. ticket sales fell 6% and total attendance drooped 9% — the third straight year of decline — according to the MPAA’s tally.

Because of a slight decline in the cost of production from $62.4 million to $60 million, the overall costs of making and marketing a studio film stayed steady from 2005 to 2004, at $96.2 million last year compared with $96.8 million in 2004.

In a tradition started by former MPAA prexy Jack Valenti, the economic report has been presented as part of the org prexy’s address at ShoWest. His successor, Dan Glickman — who is skedded to appear at the confab first on Monday and then with National Assn. of Theater Owners prexy John Fithian on Tuesday — chose to get the bad news out of the way in advance of the confab.

Glickman was busy lobbying Congress on Thursday, according to an MPAA rep, and unavailable for comment.

The rep said the release shift was done to prevent Glickman from having to dwell on last year at the upcoming confab. “We want to use ShoWest to talk about the industry and the challenges we face, where we’re headed and how we’re going to preserve the great strength we have,” an MPAA rep said, “and not about facts and figures from last year.”

In a statement, Glickman put a positive spin on last year’s biz. “Despite increasing competition for consumers’ time and entertainment dollars, theatergoing remains a satisfying constant in people’s lives. That said, we can’t bury our heads in the sand. We have to do more to attract customers and keep regulars coming back. It is no secret that our industry faces new challenges, but with every challenge, there is an exciting opportunity.”

Next week’s confab is Glickman’s second since taking the reins of the studio trade org.

Last year’s bump in marketing costs follows a decline in 2004, when the average marketing cost per film dropped 12%. The rise in 2005 appears to have been driven by bigger spending by studio’s specialty labels. MPAA figures show the studio subsidiaries spent on average $15.2 million to market their pics, a 33% climb from 2004, when costs were $11.4 million.

That rise in P&A costs came despite a 19% drop in the cost of production of the specialty pics, which carried an average pricetag of $23.5 million.

Overall, studios said their ad dollars were steady in 2005, though there were small declines in newspaper ad buys and online ad spending was up slightly.

Changes were more dramatic among specialty units. Spending in newspapers dropped significantly from 19.7% in 2004 to just 15.5% of ad expenditures, as television, online and other media all showed gains.

While the MPAA figures are one of the few industrywide measures of how much it costs to make and release feature films, they are not entirely representative of studio economics.

For instance, studios now rely heavily on promotional partners to complement their own marketing dollars. For instance, last year 20th Century Fox turned to a wide variety of sponsors who aired “Fantastic Four”-themed ads in connection with their own products. Those third-party numbers are not counted by the MPAA.

Likewise, its production figures do not include outside financiers, such as Legendary Pictures, which put up half the budget of “Batman Begins.” Though the total budget reportedly was $150 million, because Legendary co-financed half, that pic would cost $75 million in the eyes of the MPAA bean counters.

The MPAA reported the average cost of a movie ticket again increased last year, by 3% to $6.41, up from $6.21. Since 2002, when admissions peaked at 1.64 billion, the MPAA reported ticket costs have risen 10%. Over that same time period, attendance has shrunk by 15%.

In a new twist, the MPAA commissioned Nielsen NRG to analyze moviegoer behavior. When asked if they thought their last moviegoing experience was worth the time and money, almost a fifth said no, with 15% saying they would have preferred to wait for the DVD and 4% saying they wish they had skipped the film.

And while a majority of moviegoers say they still believe theaters are the best places to see films, a significant 31% said their home offered the “ultimate movie-watching experience.”

Older women were more likely to prefer staying in to going out to a theater. Among women ages 25 and over, 36% said home was where they preferred to see their movies.

Younger men, 25 and under, were the most die-hard theater fans, with 81% saying they preferred the theater over homevid.

While a record eight titles grossed more than $200 million last year, it continued to be hard going for R-rated fare. The only R-rated film among last year’s top 20 grossers was “Wedding Crashers.” There were three in 2004 and five in 2003.